The Bureau of Ocean Energy Management (BOEM) released proposed revisions to its bid adequacy procedures that are in place to ensure receipt of fair market value from Outer Continental Shelf (OCS) oil and gas lease sales.
These proposed revisions are in response to the Government Accountability Office’s recommendations in its October 2019 report titled “Offshore Oil and Gas: Opportunities Exist to Better Ensure a Fair Return on Federal Resources.” The proposed revisions include the following:
- Eliminating the use of the delayed valuation methodology and adopting a statistical Lower Bound Confidence Interval (LBCI) at a 90% confidence level as a measure of bid adequacy for OCS oil and gas lease sales. The LBCI relies on established statistical concepts and is widely accepted as a standard approach. It also increases clarity and transparency in the bid adequacy process.
- Discontinuing the use of tract classification, which has had minimal impact on the procedural analysis of fair market value. ?
- Making other, minor revisions to clarify and streamline processes.
- The revised bid adequacy procedures, when finalized, will be implemented for use in oil and gas lease sales in the next National Outer Continental Shelf Oil and Gas Leasing Program.
The proposed revisions will be published in the Federal Register tomorrow, January 19, 2023, for a 45-day public comment period ending at 11:59 pm ET on March 6, 2023. To comment on the proposed revisions, go to www.regulations.gov and search for docket number BOEM-2023-0008.
